Overnight delivery is no longer good enough.
As online shopping has exploded in popularity, one of the few remaining barriers for the industry is the lag time between when a customer orders an item and when it's delivered, typically days later.
In a quest to provide online shoppers with immediate gratification, retailers and tech start-ups are devising ways to get purchases to shoppers in mere minutes: They're experimenting with dropping off packages via bicycle, subway, motorcycle and even on foot in an effort to speed up delivery times.
The most far-fetched plan to date was unveiled Sunday by Amazon.com Inc., which says it has developed a drone delivery system that can get packages to customers in half an hour or less.
Although the unmanned aerial delivery system is years away from becoming a viable option, it highlights the extent to which online retailers are willing to go to solve a long-standing problem for e-commerce — and perhaps deliver the final blow to traditional bricks-and-mortar stores.
"The warehouse model still has that last-mile logistics problem: Amazon has to depend on other people to get the packages there," said Colin Gillis, a technology analyst at BGC Financial. "If you can get goods to people in a near-instantaneous fashion, it removes any need to go to the store."
EBay Inc. last year introduced EBay Now, a local service that promises to deliver goods in about an hour for a $5 fee; the program is now in four markets, with a goal to expand to 25 by the end of next year.
Google Inc. in September debuted Shopping Express, its own same-day delivery service. Bay Area residents can order goods from businesses including Target Corp., Whole Foods Market Inc., Toys R Us Inc. and Costco Wholesale Corp. and get those items delivered a few hours later.
Start-up Deliv also promises same-day delivery for online orders. The company's drivers are everyday Joes looking to make a little extra money on the side. They pick up items from stores that are within a 15-mile radius of customers. Delivery prices range from $5 to $15.
"Speed and convenience of delivery is the final battleground for online consumers," said Daphne Carmeli, founder and chief executive of Deliv. "People want to receive things when they want it and where they want it."
Although competitors have made strides, Amazon's size and resources as the world's largest Internet seller could lead to a large-scale disruption to the decades-old model of waiting for the delivery guy to arrive.
Already known for free, two-day delivery through its Prime membership program, Amazon too has been racing to dramatically decrease its delivery times. The Seattle company has been experimenting with same-day delivery and recently announced that it was teaming with the U.S. Postal Service to deliver packages on Sundays.
Amazon founder and Chief Executive Jeff Bezos introduced the delivery-by-drone concept during a segment on CBS' "60 Minutes" on the eve of Cyber Monday, leading many to quickly dismiss the news as a publicity stunt designed to generate hype and free publicity for the company during one of the busiest online shopping days of the year.
"It's more sensationalistic than near-term reality-based," Gillis said.
But the news immediately generated huge interest online, with scores of consumers debating the viability of delivery drones.
Bezos is no stranger to taking on seemingly outlandish projects: rescuing a major newspaper, developing a 10,000-year clock in a remote mountain and recovering rocket engines from the depths of the ocean among them.
And Amazon has already made real strides in getting its delivery drones off the ground.
The online retail behemoth posted a video on its website that shows images of a recent Prime Air test flight. In the 80-second clip, a shopper buys an Amazon item, which is then placed into a plastic yellow shipping container and picked up at the end of a conveyor belt by an Amazon drone. The drone takes off and soars over a grassy field before depositing the package with a thud outside the shopper's doorstep.
"One day, Prime Air vehicles will be as normal as seeing mail trucks on the road today," the company said in a short question-and-answer section on its website.
The regulatory and safety hurdles are numerous, however, and the cost to Amazon is unclear.
Prime Air, which was developed in Amazon's next-generation research and development lab, needs to await clearance from the Federal Aviation Administration, so it could be years before its drones became available for commercial use.
Amazon said that it hoped the agency would put in place rules for unmanned aerial vehicles by 2015 and pledged that it would "be ready at that time."
Amazon Prime Air represents the first compelling consumer-facing business case for using drones, which are increasingly being used around the world.
Oil and gas companies want to use drones to keep an eye on their pipelines. Farmers in Japan already use them to automatically spray their crops with pesticides. The idea of using drones as transport vehicles has even been discussed as a way to deliver tacos and Domino's pizza.
"Those examples have more of a giggle factor than anything else," said Gretchen West, executive vice president of the Assn. for Unmanned Vehicle Systems International, a robotics trade group. "Amazon's announcement definitely raises awareness about our industry."
As interest in drones has increased among police departments and businesses, the FAA has been working to ease restrictions. Last month, the agency published a plan that sets the stage for small drones to be flown into U.S. airspace in 2015.
Drones are not allowed to fly in the U.S. except with permission from the FAA. The agency has said that remotely piloted aircraft aren't allowed in national airspace on a wide scale because they don't have an adequate "detect, sense and avoid" technology to prevent midair collisions.
Amazon noted that safety would be the priority of its Prime Air service "and our vehicles will be built with multiple redundancies and designed to commercial aviation standards."
There are logistical challenges as well. The notion of Amazon purchases soaring through the air led to jokes about people stealing packages as they were dropped on doorsteps or shooting down the drones as they whizzed by overhead. Weather issues such as rain or heavy winds could also derail delivery routes.
It could also be a potential loss of business for traditional package delivery companies such as United Parcel Service Inc., FedEx Corp. and USPS. Amazon has been a huge client of those companies and, if its drone service takes off, the website would essentially be cutting out the middleman.
FedEx declined to speculate on drone technology. A UPS spokesman, meanwhile, said: "The commercial use of drones is an interesting technology and we'll continue to evaluate it. UPS invests more in technology than any other company in the delivery business, and we're always planning for the future."
But Prime Air would be available only for packages weighing 5 pounds or less, so analysts said they expected Amazon to use a combination of delivery trucks and drones down the line.
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